Owning a home in Florida??

[Cdn Gal]

Does anybody know abything about owning a vacation home in Florida?? What about taxes etc?? With the economy slipping, there are some great deals out there- but I heard that the taxes kill you for people who live out of state/country. Any info. would be greatly appreciated! Thanks

 

[BellyBaby]

Hi there, we're also looking to buy. Property taxes are high, but if you plan to rent it out when you're not there, you can write off the expense against your income. As a foreign investor, you need at least 30% cash down, and often 6 months of payments in the bank upfront. If you go to www.searchfloridahome.com there is a huge section of info for non-US residents buying a vacation home, everything from explaining mortgages and closing cost (very weird down there - no lawyers, but brokers instead, and very high closing costs - like $8000 high) and what to expect if you rent out the home.

Good luck!

 

[minnie56]

We are actually going down Jan 14 for a few days with the intent to buy..
Good website.

 

[sk8jdgca]

Get some advise as to how owning property in USA could affect your estate. Canada doesn't estate tax but US does and if you own property even US stocks your estate could be subject to estate tax

 

[minnie56]

Fortunately-this would be our 3rd property venture in FLorida so we've had some experience with buying/selling but it is quite different than Canada most definetly.

 

[Cdn Gal]

It seems like with the tax that it just isn't worth it But can I write off my Florida mortgage against my income given that there would be a loss of income if I didn't rent it all of the time?? What if it was a business property? Would that mortgage be a complete write off for the business?? Hmmmmm

 

[Northstar]

Also, if you're planning to rent it, you may run into visa/work permit problems.

Technically, you can't do any work on your rental property, or show it to prospective customers, or any of that business stuff if you're just down in the States on a visitor's visa.

Not usually a problem... but it just takes one slip at the border, answering a question wrong, or one disgruntled neighbor or customer to rat you out to the INS, and suddenly you are inadmissable to the US.

 

[minnie56]

Also, if you're planning to rent it, you may run into visa/work permit problems.

Technically, you can't do any work on your rental property, or show it to prospective customers, or any of that business stuff if you're just down in the States on a visitor's visa.

Not usually a problem... but it just takes one slip at the border, answering a question wrong, or one disgruntled neighbor or customer to rat you out to the INS, and suddenly you are inadmissable to the US.

Huh? We owned a Condo on St Pete's Beach for years that we rented 50 out of 52 weeks for the most part..did not require anything at all?? We were merely foreign Investors. What does that have to do with a Work Permit or Visa? Not required. Then we bought land and built a home on it..we rented that to people we knew only. Again, never an issue.
I am confused.

 

[angela1044]

My mother is a dual citizen and has been wondering about buying. Would it be cheaper for her for taxes?

Also, a friend of mine was telling me that it isn't the taxes that are the real problem but actually finding an insurance company that will take your home on. Between finding a company that will do it and the price, she said was the real deciding factor in her opinion. Her parents own a place right now and have ended up with having to find many different insurance companies - and they have never put in a claim.

 

[minnie56]

I have no knowledge of whether a dual citizen would get a break on the taxes.

Insurance is very much tied into where the property is located. The Beach area (where we owned) being very much higher. A friend of mine owns on Del Ray Beach Nth of FLL and her annual taxes are $25,000!!!! There is a range..something like 10 miles inland before this isn't such an issue. That being said..my neighbours purchased a Condo this past Summer in Naples, 2 miles from the Beach and her taxes and Insurances are very reasonable?

In Florida, everything varies greatly, County to County. There's no one rule that covers all properties. There are ways to make the taxes lower as well ie: making the home a second property rather than an Investment property and that is why a good Real Estate Lawyer is a must when making this consideration.

 

[BellyBaby]

The estate tax will be up for vote soon and word is it will likely disappear. Even if it didn't, you need to have about 3 million before you have to worry about it....I know I won't have to worry about it.

You can't own the property as an investment if you stay in it at all. It's viewed as a vacation home that you are renting in most every case to CRA. If you file tax in the states (which you should - otherwise you just pay a flat 30% rate, filing lets you claim deductions) the mortgage interest is deductable, insurance, property taxes, water, hydro, advertising, repairs, accountant, pens, etc. as well. You'd have to rent it out a LOT to make a real profit after all that. So in the end, everything should take care of itself. I would set up ownership split up if you can, that way one person doesn't take the hit for capital gains when selling.

As far as not allowed to work on your own home - wha? I heard OTHER people who are not owners can't do work on the home for free (taking away paid work from residents) but I thot you were free to do your own work. In any case, how do they monitor that? Are there cops posted outside the Home Depot following you around?

 

[sachs1999]

I would like to provide my input on a few topics.
1. As for the not being able to work on your own property this is techinaclly accurate. The US laws can be interpreted to state that you are not legally allowed to perform improvments on a property when you are not legally allowed to work. Thsi may sound insane but it is technically accurate. There was a women in BC who was arrested at the border as her tennats and neighbors filed comlaints. She was charged, however not sure of the outcome. I am sure she was prosecuted as she had never filed a us tax return for her rental income.
2.Estate taxes. It is accurate that the 3 million dollars is one threshold. Also their is a residency requirement, basically you have to be there more than 4 months per year for 3 years for it to apply. There are many nuances with this. As for changing the current estate taxes end in 2010, many people think this will just end then. This will not be the case, it could be more taxes or less but will not go away completly.
3.Insurance:Being a foriegn owner of a property should not affect your ability to get insurance form large providers, your real estate agent will be able to help you.
4.Costs:The closing process is very different from here. The costs range dramatically. The costs change by state and county. They are much more if their is a mortgage on the proprty too.
5.Mortgages:It is esentially imposible for candians to get a bank mortgage in the usa right now. From what I have been told by banks and other investors down there right now expect to have to put 50-70 percent down. You can get private lending with less down but expect to pay 7-11% interest. RBC does offer mortgages to candians through their us arm however again quilifing is not easy. The best way, and easiest, is to get a home equity line fo credit here to buy there. Most major candian banks offer prime plus 1 now thus 4.5%, which is easier to get, lower cost than current us mortgage rates, and allows you to make cash offers on property in the us which is a huge advantage.
6.US Taxes: If you rent out your property i suggest doing it. You can get an accountant in canada to do it for you, large companies such as kpmg and deloitte offer this service for not much more than candian taxes.

If you have any other questions please feel free to pm me.
Ryan

 

[Northstar]

As far as not allowed to work on your own home - wha? I heard OTHER people who are not owners can't do work on the home for free (taking away paid work from residents) but I thot you were free to do your own work. In any case, how do they monitor that? Are there cops posted outside the Home Depot following you around?

The problem is if you are renting it out, it's a business generating income for you... and if you work on it, say painting the place or fixing the broken air conditioner, you are working, not just investing, in the US. You're supposed to hire people to do all the work on the place.

I know it's dumb. But like I said, all it takes is one misstep at the border... like when they ask you "what is the purpose of your trip?" you say "I'm going to paint my condo so it'll be ready for the renters next month"... or one disgruntled neighbor who knows you're Canadian and saw you up on your roof doing some repairs, and calls the INS. Then you're in the Twilight Zone and find that you were not supposed to be doing all those perfectly normal things that everybody does on their own property.

So be careful and don't go telling people too much about your business if you do buy a property and rent it out. You want to fly under the radar.